Welcome to the hotel Butyrskaya

by
at 07/03/2012 21:31

Hotel guests in Moscow could soon find themselves bedding down in former government offices or even former prisons, if separate plans by the government and the Audit Chamber, respectively, become reality.

Under plans for the expansion of Moscow announced by President Dmitry Medvedev last year, various government offices are scheduled to be moved out of the city over the next few years as the capital desperately tries to address the chronic shortage of available land in the city center for residential and business properties.

Meanwhile, the Audit Chamber has proposed moving city prisons out of Moscow to redevelop their vast buildings into hotels, museums and office centers, real estate agencies reported recently. Realtors have calculated that up to 148,000 square meters of prime real estate will become available – a vast amount, considering the current ban on construction in the city center.

Greater Moscow, the plan to move regional government agencies outside the city, is not the only broader scheme trying to address the weak hotel market. Since early 2011, City Hall has been trying to attract more foreign travelers, offering street signs newly translated into English, an English-language call center for tourist information, and TV ads shown internationally inviting tourists to the city.

In one ad, shown on BBC television, Bolshoi dancer Svetlana Zakharova describes how she “can’t wait” to welcome foreign visitors to the city.

Another part of the campaign is the city tourism department’s new official web site, travel2moscow. com. Introduced on Monday, the site includes popular tourist routes, lists of hotels and restaurants, and information on other attractions.

These efforts are already having an effect. Sergei Shpilko, head of the city committee on tourism and hotel infrastructure, reported in February that the number of tourists visiting Moscow increased by 12 percent in 2011, with 4.5 million more foreigners visiting than in 2010. Two- and three-star hotels have reported a 10 percent increase in bookings, and the city has set a goal of attracting 7.3 million visitors, double last year’s figure, by 2016.

New hotels opening

By the end of that year, some 33 new hotels could be operating in the Central Administrative District, including about 2,000 rooms becoming available in 2012, the district administration announced. The Accor Group’s Merkur Arbat is slated to open later this year, while Ibis, Kempinsky, Novotel and Hilton are preparing new establishments to open in the next two years.

The five-star Intercontinental Moscow opened on Tverskaya Ulitsa in early February, on the site of the Soviet-era Minsk Hotel.

Despite the progress, analysts say that Moscow is still lagging far behind other destinations in the number of quality hotels.

“Out of approximately 57,000 hotel rooms, only 13,000 have an international star classification,” said Alexei Korobkin, senior consultant at the Moscow office of HVS Global Hospitality Services, a consulting company. “The rest either dated back to Soviet times (thus in need of replacement) or can’t be considered under-par in services and facilities.”

While a lack of affordable, modern accommodation is a major liability for the tourism market, analysts fear that attention will be diverted away from the capital to Sochi in the run-up to the Winter Olympics in 2014. An even more fundamental and long-term problem is that investors may not be willing to develop low-cost hostels and mini-hotels without support from the city government.

“Investors are not really interested, because it takes too long to make a profit from small hotels,” Korobkin said. If the authorities are looking to boost tourism, they should give special incentives to developers to build up the market, he added.

Korobkin feels that the biggest obstacle is the extremely high price of land in Moscow.

It is here where the Greater Moscow scheme may help. Mayor Sergei Sobyanin has spoken in support of converting some official buildings, once their former occupants have moved, into mid-range hotels and hostels. Developers may be so eager to get a piece of Moscow property, that even notorious locations will be welcome, real estate agents have said.

Penny Lane Realty has ranked the buildings of seven Moscow prisons according to estimates of how much money they could earn as properties after large-scale renovation. The biggest and the best-known – Butyrskaya prison, near Savyolovskaya metro in northcentral Moscow – came top, with a potential sales cost of $1,800 to $2,300 per square meter. Annual rent of an office could be as much as $500 to $600 per square meter.

“Butyrka has a long history and a central location, so as a hotel it may draw a lot of tourists,” said Maxim Zhulikov, director of commercial real estate at Penny Lane. “Otherwise, it could become a museum, a cultural center or an exhibition hall.”

Lefortovo a target

Zhulikov said commercial tenants and hotel guests wouldn’t necessarily be put off by a building’s reputation and former occupation.

“Developers already have reconstructed one former prison for female inmates at 43, Lesnaya Ulitsa,” he said. “Today it hosts a business center, and companies that have offices there were not put off by the dark corridors.”

Penny Lane’s target list of prisons to be converted includes Matrosskaya Tishina, near Sokolniki Park, and the FSB’s Lefortovo, which is profitably close to the Third Ring Road. The agency considers other prisons, such as Voikovskaya or Krasnaya Presnya, less desirable for tourists due to their proximity to industrial areas.

Some analysts were skeptical, however, that converting prisons into hotels could help to upgrade the Moscow hotel market.

“Some prisons like Butyrka may host a museum or similar tourist attractions, but I would question whether many people would be willing to spend a night there,” said Korobkin, of consulting firm HVS. “Even one of the world’s most famous prisons, Alcatraz in San Francisco Bay, is used as a museum.”